Posted
by
timothyon Tuesday April 15, 2014 @01:07PM
from the rent-seeking-right-on-the-surface dept.

McGruber (1417641) writes "Return-free filing might allow tens of millions of Americans to file their taxes for free and in minutes. Under proposals authored by several federal lawmakers, it would be voluntary, using information the government already receives from banks and employers and that taxpayers could adjust. The concept has been endorsed by Presidents Obama and Reagan and is already a reality in some parts of Europe. Sounds great, except to Intuit, maker of Turbotax: last year, Intuit spent more than $2.6 million on lobbying, some of it to lobby on four bills related to the issue, federal lobbying records show."

Yes. Was one of the Ryan-as-president ones. Probably Executive Orders. I believe the Warren Buffet expy he appoints as SecTreas uses the tax code to break a table to convince Congress that the tax code needs simplification. It includes some monologuing about cutting capital gains taxes to encourage investment (something that sounds obvious, but is generally unsupported by evidence).

Sure, it's unsupported by evidence, but it's been widely supported by both parties in congress. The number of actual national electors left enough to believe capital gains maybe ought to face progressive taxation(for all the reasons progressive tax brackets are usually a good idea) is in the single digits.

What studies are you referring too? Everything I have seen has suggested lower taxes on capital leads to move investments.

I will admit that doing studies like these are hard. You have to factor the difference between high vs. low taxation states, how taxes are raised (income vs. consumption vs. investments)that the country has to be publicly committed for the long term (i.e. 10+ years), and how capital is taxed (capital gains, wealth tax, dividend income, etc.)

All those stocks traded in the secondary market? They create the market for IPOs. They establish the playing field for new businesses. When one sort of business gets high P/Es relative to the others, that sort of business is more likely to get new competitors.

Here's a better question - why not just a flat tax?

Taxes exist to fund the government, not for some social agenda (that we'll never agree on anyway). Tax all income, dividends, and capital gains at X%, and be done with it. You might be surprised h

It's downright embarrassing how little money it even takes to buy the government. Intuit makes a couple billion dollars a year [intuit.com]. The lobbying spend, $2.6 million, is about eight hours' worth of revenues.

The laws can be for sale, only to the extent that the lawmakers are selling!

Every special interest should be free to lobby. The real trick is electing representatives who understand that catering to a special interest is, by definition, detrimental to the general interest. (If something is in the general interest, it's by definition not a special interest.)

and think we should start off with the premise they're crooked and on the take and force them to live under much more careful scrutiny.

You should be doing that already. I know I do. Every society that doesn't is in danger, but with all the ways the government is infringing upon our fundamental liberties and the constitution, we've obviously not been careful.

And god forbid they actually lose talking points by actually accomplishing something they've said they'd like to do.

What they want to do is stay in power. They'll change some things if they get the chance but that's a second order effect. What they really want to do is whatever will keep them in power and they will sell their soul to do it. They'll say whatever they think gives them the best chance to retain power and get re-elected but what they actually do is what shows you their real goals.

To be fair, that's billions in revenue, not profit, so I wouldn't say they "make" a couple billion per year. In fact, the source you linked to shows that their operating income is negative, so after subtracting expenses from that revenue they are losing money. So, they don't have a few billion in spare cash sloshing around -- that $2.6 million is not a negligible amount of money for them. The fact that they still think it is worth spending on lobbying when they don't have a lot of spare money is perhaps an even stronger statement about how effective lobbying dollars are.

errrr - the press release says they lost money for the 4th quarter, which I am going to guess is their slow time of the year. IIRC their profit last year was 820m and they have made 680m so far this year. Not billions but nothing to sneeze at either.

Maybe I've naive, but I really don't think lobbying is just about buying votes.

That is to say, I don't think the government has a perfectly reasonably policy, like simplified tax returns.

Then Intuit comes along and says 'This is gonna hurt our profits', so lets pay politician X some money to stop this bill.

More than likely, lobbying is backed by 'real needs'Let's face it, there are a lot of people employed as accountants and I guess nowadays, a fair amount of software developers and business. These are real

Let's face it, there are a lot of people employed as accountants and I guess nowadays, a fair amount of software developers and business.

The people who this simplified "let the government figure it out and send back what they think I deserve" plan wouldn't apply to the vast majority of people who use accountants or probably even most of those who use TurboTax. They're using an accountant because they want every penny back that they deserve. Yes, I said deserve -- the legal amount.

There are already several free tax filing systems. TaxACT Online [taxact.com], H&R Block [hrblock.com], The IRS [irs.gov], and even TurboTAX [turbotax.com], the very company that is being slammed for allegedly standing in the way of free tax filing. If you are a die-hard, you can download [irs.gov] the forms and send them in for the price of a stamp or two (my state forms, seven pages of paper, cost $0.70 to mail.)

I don't doubt that companies that lobby for things feel a very real sense of needing what they are lobbying for.I also don't doubt that there are times when 3rd parties are served or even well served by the outcomes of such lobbying.

But these things ought not be decided based on who has money and who doesn't.

I am all for impacts being analyzed and plans being made to make sure people are not unduly disrupted, but decisions should be made on merit.

Hello again. This time I wont try to have my cake and eat it too, as I have not moderated in this article.

"So lobbying can have good outcomes."

Yes, and a broken ( old style ) clock is correct twice a day. The occasional "good" accident does not mean accidents are good.( where "good" means has a good outcome ). So, if I were writing a constitution, things would be different.

"It is difficult to separate the feelings that someone bought a result you don't like from an objective analysis of whether what you

On the one hand, filing Return-free filing would be a nice option...on the other, I like that people have to take the time to notice how much money Uncle Sam is taking.

Most of them only look at how much they're getting back, which is the majority of people. If you really wanted it to sink in, you'd need to end paycheck income tax withholding and actually have them write a check on April 15.

It amazes me that people *still* give the government interest free loans. Getting money back via your tax return is bad. I strive to owe the government the maximum amount I can each year without penalty.

In some cases, it can pay off. I ended up getting around ~$800 back from the feds this year and through a deal on Amazon, I got 10% bonus by getting the refund back in Amazon gift credit. That's a free 80 bucks, well better than any tiny interest rate I could have gotten in a savings account. When the interest rate you can get is higher than the rate of inflation, you might have a point...

You can get basically anything at Amazon. If it were nothing but toys, or even books, I'd be right with you, but you can get most of your household goods (cleaning products, paper goods) and many non-perishable foods. In fact they're my preferred vendor for most such items.

While that sounds nice in theory but for most people it doesn't make any different. For example say you get back $2,000 from your tax return. If you intend on saving you could keep in your weekly check that money and put it in an interest barring account and come out ahead. but when your saving account is paying 0.1% interest you are making less then $2 by doing so. $2 a year for most people isn't even worth time time to figure out the proper withholding. And don't tell me about the stock market or similar where i am putting my money at risk. so until interest rates go to a sane level its just not worth it.

While that sounds nice in theory but for most people it doesn't make any different. For example say you get back $2,000 from your tax return. If you intend on saving you could keep in your weekly check that money and put it in an interest barring account and come out ahead. but when your saving account is paying 0.1% interest you are making less then $2 by doing so. $2 a year for most people isn't even worth time time to figure out the proper withholding. And don't tell me about the stock market or similar where i am putting my money at risk. so until interest rates go to a sane level its just not worth it.

It amazes me that people *still* give the government interest free loans. Getting money back via your tax return is bad. I strive to owe the government the maximum amount I can each year without penalty.

1) Especially right now, that money wouldn't earn much elsewhere, especially if you put it into a safe investment. If you just keep it in a bank account, for most people it's probably barely worth it. (Th

I strive to owe the government the maximum amount I can each year without penalty.

They penalize you if you want to owe them more? I don't really see how that is affected by paycheck deductions? Also, you must be the first person I have met with that attitude. [/sarcasm]

Seriously though, lets say you make good money and ended up paying $15,000 in federal taxes. What interest rate could you get on that? Quick check at wellsfargo.com says you can get a whopping.01%. If you have over $25,000 in an account you can get a massive.05%. Linked checking account gets you to.1%!

Just a note: Depending on how well your employer games the system you may be loaning it to your employer more than you are to the government. Your employer "withholds" it when it pays you, but it's not cutting a check to the govt for that withheld portion immediately. Smaller employers may even get away with just paying the withholding taxes on their annual corporate taxes. I know my state govt is way more insistent about getting it's tax withholding promptly than the fed is.

It would not be hard to make it clear to people how much "The Man" is taking.

You'd think so but I'm an accountant and I do our company payroll. You would be *amazed* at how seldom many people look at their paycheck, particularly if it is direct deposit. I get asked all the time how much vacation people have left even though it is printed right on our paystubs every two weeks.

That said, I'd have no problem in principle with some sort of reasonable (yeah I know...) automatic payment system. The devil is in the details and to do it you can't have too many special tax exemptions. (o

Well, that pretty much sums up the issue right there. On the face of things, it seems straightforward.... everybody pays whatever the government thinks they owe.

On the other hand, there's so many ways the government can screw things up royally. One year, they missed an education deduction I had because they didn't know I'd gone to grad school that year. They hadn't accepted the paperwork the school had sent in. The proper resolution was for me to write and sign a letter affirming that I had done what I'd cl

The whole point of those deductions is (ostensibly) to make taxes more fair,...

Ha, ha. No. The whole point of deductions is to buy sway with voters. In fact the whole point of the US tax code is NOT to help collect taxes. It is to give a way goodies to the proper special interest groups.

If the government wanted more 'fair' taxes, they could simply adjust tax rates higher or lower based solely on income. Why should I subsidize your decision to go to grad school?

Why reinvent the wheel? If you opt-into this system, the IRS could autogenerate a filled-in PDF copy of the form you select (they already have the PDFs available, and they're editable) and ask "Is this correct?" If it is, you click yes. If you're due a refund, you enter your account information (to have it directly deposited) or indicate you want it mailed to you. If you owe, you enter your account information or you indicate you'll send in a check, at which point you get a form to print with all the releva

If you're not itemizing your taxes, then you don't need to worry bout those kinds of deductions.

And there's nothing preventing you from entering your deductions during the year similar to Intuit's It's Deductible. Enter in your charitable contributions including item donation and it takes care of the rest. If the IRS wants to audit you then it's your responsibility to make sure you have supporting evidence.

Right, what we should do is get rid of withholding and make EVERYONE pay quarterly estimated taxes. I suspect we would very suddenly have TEA party ( or similar ) membership right around 53% of the adult population.

No, you'd just have a bunch of big banks getting into tax financing, offering modest loans at reasonable interest rates(see fine print) to help people who didn't save for their bill.

The withholding system works because it causes the least economic distortion -- the more a tax "hurts," the more adverse an effect it has on day-to-day economic decisions, the more it's liable to cause people to make bad economic decisions, like saving huge lump sums in the bank instead of investing or consumption. A tax "hurting" might be good politics (for some people), but if it causes people to have irregular cash flow or makes it significantly harder for them to make planning decisions it will hurt economic growth.

his point was that people need to see what they're giving to the government

People "see" it already, on their paystubs and on their 1040s.

What he wants is for tax collection -- not taxes themselves, just the way they're collected -- to be intentionally disruptive, so that people will attempt to lower rates and revenues not because they are high, per se, but just because the way they're collected causes economic harm.

but only to outsource technical and engineering jobs. Heaven forbid if we automate away accountants and bureaucracy. THEN technology is taking jobs away!

I actually happen to be both an accountant and an engineer and actively practice both in my day job. I would LOVE to automate a lot of the paperwork shuffling I do as an accountant. Want to make a fortune? Come up with an EDI type system that doesn't cost an arm and leg and allows businesses to exchange invoices, delivery information, order acknowledgements, etc automatically between businesses of any size and that integrates with existing accounting systems. Start with Quickbooks and Sage. I probably

I once read that a third of all tax credit dollars earmarked for the poor go to H&R Block. This must be where another third goes. This is no different from the record companies fighting tooth and nail to prevent their old business model from dying. It's no surprise that it's happening - it's sad that it's working.

Here in Norway we have had this system for ten or more years. Super easy for most with just paychecks and a mortage. Highly recommended! And if you want or need you can still do it the old fashion way. Also highly recommended is checking your yearly totals agains the simplified report. Computers occasionally make a mess.

Depends... They're saying that poor people wouldn't get deductions and tax credits if they did this...

So... that's a credible point.

That said, if poor people did this then the form itself might get reformed enough to account for that without the complexity... perhaps by lowering the fucking taxes.

Most poor people don't have enough deductions to itemize them, so the deductions are a red herring. Tax credits could be an issue, but it doesn't sound insurmountable. In addition, poor people don't use Turbo Tax, so why is Intuit even bringing it up?

a story I heard on NPR not too long ago. The head of the Government Printing Office was talking about how their headcount was less than half what it was 20 years ago due to heavier use of digital forms. She mentioned how few copies of the federal budget they print every year and so on.

All of this sounds great because she's helping to keep costs down while increasing the availability of government documents to he masses. Who would think that's a bad thing?

The paper industry. They had the head of an umbrella group for the paper and forestry groups who cautioned about moving too fast to go digital, how some people still liked paper forms and so on.

So the next time you hear someone say the government doesn't create jobs, ask them why private industry is up in arms every time the government tries to cut costs by not purchasing things. In this case, the literal tons of paper that used to be used to print government documents or, as in the case of Intuit, all the work they would no longer have to do if the tax filings were simplified.

So the next time you hear someone say the government doesn't create jobs

The government absolutely creates jobs. Lots of them. The government is something like 20-30% of the economy and a similar portion of the jobs. This is true for most of the governments on earth and it's actually not a bad thing. Remember that government jobs include things like the military, police, fire, teachers and the like which are all necessary and useful functions. Some amount of administration is useful too. Many important and necessary private businesses make their money contracting for necessary services to governments. Governments definitely create jobs and many of them are even worth creating.

The problem is that the government doesn't generally have a good way to prune back services that are no longer required and doesn't tend to be exposed to market forces forcing it to be efficient. It also means that those who are doing well with the status quo will try to keep it, even when that doesn't make economic sense.

You're missing the point. You will routinely hear from the right side of the political spectrum (and private industry) people claiming the government doesn't create jobs, it only takes from the masses.

In their next breath they whine and complain whenever the government cuts back, such as with the Printing Office or elimination of military projects (the Abrams tank comes to mind) because it will cost jobs, completely ignoring the only reason theses folks in private industry have a job is because of the government.

I only bring this up because I like to throw things back in people's faces when they make blanket statements such as this, just like all government workers are lazy or how private industry always does things better than the government.

This is just one more thing Intuit does to hurt taxpayers. The biggest and craziest is that where you can e-file your federal return for around $5, most states charge $20, because Intuit sued them for unfair competition when states came out with online 2D barcoded returns. Intuit wasn't upset if a taxpayer filled out a regular PDF and mailed it in, but evidently since the 2D bar coded ones saved states revenue and they encouraged them, they felt it cut into their profits and sued. Evidently the courts agreed and now, you must pay extra to e-file a state return so Intuit can get their cut, even though you aren't using their software.

If people were smart, they would use one of the alternatives to Turbo-Tax, e-file their federal return and mail in their state return. That way, Intuit doesn't get a dime of unearned money.

A U.S. appeals court on Monday struck down parts of a regulation that forces public companies to disclose if their products contain "conflict minerals" from a war-torn part of Africa, saying it violates free speech rights.

Because when corporate money is equated with free speech, they can afford to have their speech heard m

Whatever court decision decided that corporations are people too was garbage.

That would primarily be the Citizens United v FEC court decision of 2010, and further backed up by the recent McCutcheon decision of 2014, though of course other little laws and regulations contribute.

If you would like to do something about it, I would encourage you to join a group such as the WolfPAC [wolf-pac.com] and Move to Amend [movetoamend.org]. A couple state legislatures (California and Vermont, I believe) have *already* passed bills calling for a constitutional convention to propose a new constitutional amendment that puts into l

Just to explain your modding into oblivion, lemme spell it out with you.

This is a flat tax. Everyone is taxed at 10%. (Yes, it's a percentage, and not, say $200 flat, but it's what it's called). It is not progressive (taxing the rich a higher percent) nor is it regressive (taxing the poor a higher percent). It's flat.

This has been shown to be a ludicrously bad idea. Not as bad as a regressive tax, but still pretty bad. It turns out that economies usually aren't fair and balanced and the gini coefficient [wikipedia.org] isn

The problem with your tax form is that actually calculating the amount of income you had last year is actually pretty complicated for a pretty big portion of the population, particularly the wealthier folks. Seriously. 90% of the tax code not devoted to various tax exemptions is basically devoted to defining income. Why? Because it is not trivial or easy. There are countless corner cases and sources of income and financial instruments and other things to complicate what you income is. We could simplif

Intuit's QuickBooks package is in desperate need of competition. It's thoroughly entrenched in the accounting industry such that the interface is nonsensically-antiquated. Yet, it's become one of those industry standards that Intuit refuses to modernize it or introduce any kind of improvements for fear it will alienate the armies of accountants that have been compelled to learn it.

If google were to launch a cloud-based bookkeeping app, this would be a tremendous benefit to small business owners worldwide.

This will happen time and again. If not Intuit, it will be industry X buying government on issue Y because it benefits them.

You can blame Intuit all you want, but that's like blaming sand for flowing downhill. Legal lobbying for your best self-interest is what we all do.

The real problem is not Intuit, but it's the Government. It should not be "buyable." Its purpose was to provide national security and law and order, that's all. The more functions and power it takes on, the more the lobbying goes up..

And when the IRS inevitably discovers they messed up on the "return-free" return they generated for you five years ago, who is liable for the resulting penalties and interest? Because I'm betting it's not going to be the IRS.

Well just another instance of Big Government and regulations equating to rent seeking & crony capitalism.

- Create Condition - convoluted tax code

- Fix condition you created with Government money- Federal paid assistance to file taxes

- Claim you're helping the little guy

- Profit!

Here is another example - Food Stamps (aka SNAP) and Agriculture policy. You might think food stamps exist to help the poor, but you'd be wrong. Food stamps are part of the AGRICULTURE spending bill, not the health and human services bill. The idea is to stimulate buying of "surplus" agricultural produce by subsidizing poor people who can't aford to buy it. But the dirty secret is that the agrculture policy of price supports both stimulates over-production for some crops and under-production for others while keeping prices high and making food LESS affordable for the poor. With food stamps the agribusinness interests can now sell the 'surplus' created by the price supports (government money) at artificially high prices to the poor (with government money), all the while with the political overhead cover of helping "family-farmers" and the "hungry children".

Yeah, pretty much the same here. You logon to their secure web portal, and fill all the forms online. For most people, everything is pre-filled, and you just have to OK it, which can even be done via SMS. Personally I have a more complicated setup involving income and accounts abroad + special tax exemptions, but even then I spend much less time than the Americans I know.

If you want to talk overall economic health, taxation does not really impact it since all those tax dollars just go strait back into the economy anyway.

As for 'every corner', this is actually rather important. When you focus all your tax burden on some particular metric it tends to skew who pays and who does not further and further. By spreading it around it starts to better represent actual movement of money in the economy rather then specific types of transactions.

If you want to talk overall economic health, taxation does not really impact it since all those tax dollars just go strait back into the economy anyway.

Ehhhhhhhh.. it's not that simple. The government can allocate wealth well or badly, it can waste a significant amount of money by overpaying, by giving a supplier more than the least they would be willing to accept -- classic economic rent. Suppliers win premium prices through lobbying.

It cuts both easy though, lobbying can cause the government to waste m

If you want to talk overall economic health, taxation does not really impact it since all those tax dollars just go strait back into the economy anyway.

Please remove this falsehood from your economic system. If you take productive money and piss it away on boondoggle projects instead of useful purposes then it's a complete loss for the economy. The entire premise of capitalism is that money that gets invested into useful purposes (production equipment, invention, entropy-reducing services) multiplies the value of that money over time. All spending is not created equal (so far from it)! Hanging fiber optics on poles and getting drunk are not equally beneficial!

it tends to skew who pays and who does not

Everybody pays. The producers add their tax burden to the cost of goods. The study from Harvard econ. sets the price of goods as 22% higher (average) than they would otherwise be without the income tax. When that single mother is buying a $3 loaf of bread for her kids' school lunch, more than fifty cents of that is going straight to pay the income taxes of the people in the supply chain. That's why it's the most regressive tax possible. People can only pretend that it's progressive if they completely ignore second order effects and beyond.

'productive' is highly subjective. A minority of our economy is actually tied to necessities and infrastructure, most of it is tied up in things that have value but are otherwise frivolous. Which gets into the high level concepts of what objectives and metrics we want to optimize for.

Ok, so then let us move that tax onto sales instead. Oh wait, the person still ends up paying 22% higher costs on items then they would be tax free except now the tax burden is skewed towards the transfer of material goods

That depends on what the money is spent on. If the money is spent on something that brings a greater benefit than the cost, it helps the economy. Taxing yourself to buy a car doesn't automatically hurt your household economy--it depends on how much you spent on the car and how much income your car will bring.

This business-as-usual apathy is what's destroying America. Yes, I know this kind of lobbying is endemic, but that only makes it more of an outrage. Almost [wikipedia.org] everything [wikipedia.org] is sold out to the highest bidder already. When will they come for your interests?

The number of taxpayers who need to itemize would be reduced to 1 in 4. We envision a system where more than half of us would not even have to fill out a return. We call it the return-free system, and it would be totally voluntary. If you decided to participate, you would automatically receive your refund or a letter explaining any additional tax you owe. Should you disagree with this figure, you would be free to fill out your taxes using the regular form. We believe most Americans would go from the long form or the short form to no form.

That, and their customer support is really awful (the actual software is mediocre). It doesn't handle moving states to change jobs very well. It kept trying to slap me with an entire year's worth of taxes for one state. Customer support was non-existent (see numerous Intuit fora).

Yeah, it redirects you to a number of free choices by the same leech^H^H^H^H^Hfine companies, including the free web version of TurboTax that is also clearly advertised on their website. And if you have kid, or anything else "out of the ordinary", too bad, that's too complicated for the free version, so cough up the dough already.

It is "just playing the game." The question is, whose side are you on? Google in many cases has to lobby just to be allowed to do anything at all. Intuit in this case is lobbying to keep the tax system unintuitive.